Indian sugar mills generate as much 'green' energy as windmills, and at half the cost

New Delhi, June 5, 2009: As the 2009 World Environment Day draws to a close, there’s heartening news from unexpected quarters: Indian sugar mills seem to be doing their bit to ease the energy crisis in the country. What’s more, they are doing it by generating biomass-based ‘green’ energy from bagasse, a waste product that comes from sugarcane cultivation.

Sugar mills in the five major sugarcane growing states of Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu and Uttar Pradesh are contributing 2,000 megawatt (mw) of power to the national electricity grid. This is enough to meet the energy needs of a business centre the size of Gurgaon (in Haryana), says a latest report in Down To Earth, a fortnightly magazine that Centre for Science and Environment (CSE) helps publish.

However, says the study, India has no policy framework in place to strengthen this green energy source. Sunita Narain, director, CSE, points out: “This energy source is an important win-win solution, as it brings value-addition and additional funds to agricultural resources, which in turn will give better payments to farmers and improve productivity. The question is what can be done to increase this energy source for the future.”

This is called cogeneration

The process by which sugar mills are generating this power is called cogeneration – it essentially implies the production of two forms of energy, electricity and heat.

Explaining what led CSE to the study, Narain said: “We need to find alternatives to fossil fuel-based power for energy and climate security. Therefore, it is important to understand what a country like India is already doing to adopt renewable energy sources and what more can be done. We researched efforts in the country to move towards modern biomass-based energy using cogeneration technologies – and were amazed to find that cogeneration just by sugar mills was generating such an immense amount of energy!”

Today, out of the 650-odd sugar mills in India, 107 have cogeneration plants. Cogeneration has managed to bail out sugar mills reeling from the falling prices of sugar, informs the Down To Earth report. The Dhampur Sugar Mills in Uttar Pradesh, which has the largest cogeneration capacity in the country, made Rs 42 crore from its cogeneration unit in 2007-08, compared to Rs 11 crore from its sugar units. It sold about 177 million units of power to the state. The third largest sugar maker in India, Triveni, based in Deoband, Uttar Pradesh, is selling 16-17 mw of power to the state.

The International Energy Agency says that the sugar sector has a potential to produce 5,100 mw of power through cogeneration, which is 69 per cent of the total cogeneration capacity. If the resources and technology are improved, cogeneration can produce almost 10,000 mw or 40 per cent of the country’s 2008 power deficit.

How it works and what it offers

Bagasse, a residue of crushed sugarcane, is burnt in a boiler to superheat water and produce high pressure steam. The steam is sent to a turbo generator, where it rotates the generator blades producing electric current.

The report points out that bagasse generates nearly the same amount of power as the wind energy sector. Wind produces almost 2,000 mw -- most of which remains unutilised most of the time.

Bagasse-based cogeneration plants also earn carbon credits as the carbon dioxide absorbed by sugarcane plants while growing up is more than the carbon dioxide produced in burning bagasse. The cogeneration plant of Triveni earned about 186,000 certified emission reductions worth over Rs 3 crore between March 2004 and December 2007.

Needed: A stronger policy for green power

India had launched its biomass power (bagasse-based cogeneration) policy in 1990. As the shortage of power grew in many sugarcane states, the policy was revised in 2006 to provide capital subsidy (Rs 15 lakh per mw) and tax rebates (including 80 per cent depreciation in the first year for selected equipment). The 2003 Amendment to the Electricity Act also provided the necessary framework for promoting renewable energy sources – asking states to fix a minimum limit for energy utilities to buy green energy.

However, the country still has a long way to go. In the absence of a strong policy framework, feed-in tariffs (the premium cost of green power) differ from state to state and are based on scarcity (not policy). While in some states like Tamil Nadu, the tariff is as high as Rs 7 per unit, others like Uttar Pradesh pay only Rs 3 per unit. Low feed-in tariffs have begun to hurt cogeneration, says the study.

Narain says: “The policy must incentivise the generation of power, not capital investment.” The capital cost of biomass energy is roughly Rs 4-5 crore per mw, which is half the cost of installing wind energy. But unlike wind, the raw material – bagasse or other agricultural residues – has competing uses and value. Narain says this price must be paid, as it helps local farmers to improve their returns and encourages production of biomass.

Narain also recommends making the renewable purchase obligation (RPO) mandatory, so that it becomes a tool to push for preferential markets for green energy. “To do this”, she points out, “the policy must allow for inter-state sale so that green power-deficit states can purchase from others. In addition, we should consider how biomass-based energy can be used to feed local grids for local and decentralized distribution. Local energy supply should be given preferential tariffs so that villages that do not have power, get it.”

For this and other CSE press releases, please visit www.cseindia.org. To speak to CSE experts on alternative and renewable energy, just get in touch with Shachi Chaturvedi of the Media Resource Centre at shachi@cseindia.org or on 98187 50007.